The creation of cellular compartments is a necessary step in the phenotypic restriction of tissues. In the optic vesicle, transcription factor expression patterns delineate boundaries which dictate the fate of dividing cells, although early RPE cells maintain phenotypic plasticity. During RPE differentiation, microphthalmia (mi) gene encodes a bHLH-zip protein (MI) which labels the RPE compartment. mi mutations cause small eyes and a thickened unpigmented RPE layer. Early MI expression and the severe ocular phenotype arising from this mi mutation suggests that it plays a key role in RPE differentiation. Specific aim 1 will examine the hypothesis that MI expression delineates a discrete RPE compartment in the early and late optic vesicle and that this compartment is not found in the mi mouse mutant. The normal expression of MI will be compared with transcription factors marking the optic stalk, ciliary epithelium, neural retina. The mi mouse mutant will be examined to determine how eye tissue specific transcription factor expression patterns change in this mutant. Specific aim 2 will determine if the loss of MI expression is a necessary step in growth factor induced RPE to neural retina transdifferentiation. If MI is necessary for RPE specification, but not neural retina differentiation, then we predict that MI would be down regulated in response to bFGF and that its maintained expression in RPE would prevent transdifferentiation. Specific aim 3 will test whether MI is sufficient to induce RPE characteristics when ectopically expressed in optic vesicle and neural retinal cells. The ectopic expression of MI at different developmental time points either in a transient transfection system and/or in a transgenic mouse, will show if NE can specify RPE.